Market witnesses 1 million square feet in leasing activity in 1st quarter of 2017

With roughly one-quarter of Fairfield County’s office space vacant in the first quarter of 2017, building owners across Fairfield County are upgrading their office properties to attract highly sought-after tenants in the market, according to JLL.

“Transit-oriented properties and ‘light and bright’ buildings and spaces continue to be the main drivers in Fairfield County,” said Edward Tonnessen, Managing Director with JLL’s Connecticut/Westchester office. “Office properties in Greenwich and Stamford that are near or adjacent to the trains command significantly higher rents than those farther away, and bright, well-lit office space continues to be a primary draw for firms exploring their real estate options.”

Fairfield County witnessed slightly more than 1.0 million square feet of leasing activity in the first quarter of the year, the majority of which took place outside of the Stamford CBD/Railroad and Greenwich CBD/Railroad submarkets. Prudential Annuities Distributors Inc. inked the largest deal of the quarter, taking 197,610 square feet of space at 1 Corporate Drive in Shelton within the Route 8/Shelton submarket.

Despite healthy leasing activity,Fairfield County recorded 729,842 square feet of negative net absorption in the first quarter of the year, compared with 231,974 square feet of positive net absorption the previous quarter.The Stamford CBD/Railroad and Greenwich CBD/Railroad submarkets alone accounted for 561,664 square feet of negative net absorption this quarter.

Fairfield County’s overall vacancy rateincreased to 24.8 percent in the first quarter of 2017, an increase of 10.7 percent (or 240 basis points) from 22.4 percent the previous quarter. The county’s Class A vacancy rate rose to 23.4 percent this quarter, an increase of 10.4 percent (or 220 basis points) from 21.2 percent in the fourth quarter of 2016.

Overall average asking rents in Fairfield County rose to $36.75 per square foot in the first quarter of 2017, an increase of 2.3 percent from $35.94 per square foot the previous quarter. The county’s Class A rents grew to $43.30 per square foot this quarter, an increase of 3.7 percent from $41.77 per square foot in the fourth quarter of 2016.

Stamford CBD/Railroad

The Stamford CBD/Railroadsubmarket claimed five of the top 10 leases signed in the first quarter of the year, including Partner Reinsurance Company of the US inking a relocation into 56,690 square feet at 200 First Stamford Place. Although space users signed a total of 214,425 square feet in transactions throughout the submarket this quarter, the deal volume was not enough to keep pace with the amount of available space that continues to be added to the inventory.

As a result, the Stamford CBD/Railroad’s overall vacancy rate increased to 27.4 percent in the first quarter of 2017, an increase of 4.6 percent (or 120 basis points) from 26.2 percent the previous quarter. The submarket’s Class A vacancy rate rose to 26.5 percent this quarter, an increase of 3.9 percent (or 100 basis points) from 25.5 percent in the fourth quarter of 2016.

The entirely vacant UBS building at 677 Washington Boulevard continues to heavily impact the submarket’s overall and Class A vacancy rates in the first quarter of the year. If the building was excluded from the current inventory, the Class A vacancy rate in the submarket would decrease by about 7.6 percent to 18.9 percent.

Overall average asking rental ratesin the Stamford CBD/Railroad fell to $50.61 per square foot in the first quarter of 2017, a decrease of less than 1.0 percent from $50.81per square footin the previous quarter. The submarket’s Class A rents rose slightly to $53.55 per square foot this quarter, an increase of less than 1.0 percent from $53.47 per square foot in the fourth quarter of 2016.

Greenwich CBD/Railroad& Greenwich Non-CBD

The Greenwich CBD/Railroad submarket witnessed a slowdown in leasing activity in the first quarter of 2017,recording 80,000 square feet in transactions. This quarter, the submarket posted the first increase in Class A vacancy rates since the third quarter of 2015, primarily due to Partner Reinsurance’s decision to vacate Greenwich Plaza in Greenwich to relocate to 200 First Stamford Place in the Stamford CBD/Railroad submarket.

Overall vacancy rates in the Greenwich CBD/Railroad submarket increased to 23.2 percent in the first quarter of 2017, an increase of 60.0 percent (or 870 basis points) from 14.5 percent the previous quarter. The submarket’s Class A vacancy rate rose to 25.4 percent this quarter, an increase of 80.1 percent (or 1,130 basis points) from 14.1 percent in the fourth quarter of 2016.

The area remained the most expensive office submarket in Fairfield County despite the slowdown in leasing activity this quarter. Overall average asking rental rates in the Greenwich CBD/Railroad rose to $89.88 per square foot in the first quarter of 2017, an increase of 1.7 percent from $88.40per square foot the previous quarter. The submarket’s Class A rents fellslightly to $94.34per square foot this quarter, a decrease of less than 1.0 percent from $95.10 per square foot in the fourthquarter of 2016.

JLL is a leader in the New York tri-state commercial real estate market, with more than 2,300 of the most recognized industry experts offering brokerage, capital markets, property/facilities management, consulting, and project and development services. In 2015, the New York tri-state team completed approximately 32.6 million square feet of lease transactions; arranged investment sales, notes, debt and equity transactions valued at more than $8.2 billion; managed projects valued at $7.8 billion; and oversaw a property management, facilities management and agency leasing portfolio exceeding 141 million square feet.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square meters, and completed sales acquisitions and finance transactions of approximately $136 billion. At the end of the first quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of more than 78,000. As of March 31, 2017, LaSalle Investment Management had $58.0 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.